'Useful idiot': Inside China's long game - How Xi is squeezing Trump over trade

Time of India

3 days ago

Donald Trump has gone to great lengths to avoid upsetting Chinese leader Xi Jinping. (AI image for representation.)
President Donald Trump has extended the US‑China tariff truce by 90 days - to November 10 - as both sides scramble to keep tensions from boiling over again. 'I have just signed an Executive Order that will extend the Tariff Suspension on China for another 90 days,' Trump posted, hours before the previous pause expired, with Beijing announcing a parallel extension.
Trump said the US has been 'dealing very nicely with China,' adding, 'We'll see what happens. They've been dealing quite nicely. The relationship is very good with President Xi (Jinping) and myself.'
Meanwhile, the 90-day pause gives Chinese President
Xi Jinping
's policymakers additional time to strategize their next steps.
Xi Jinping: The master of economic war
China believes momentum is on its side because Trump has a stronger desire to sign a deal with Beijing so that he can claim victory and secure a summit with Xi in the fall.
William Yang, the International Crisis Group's senior North East Asia analyst, to Bloomberg
'China beats you with trade, Russia beats you with war,' Donald Trump
mused on August 11th, just hours before extending the fragile tariff truce with Beijing for another 90 days.
The comment, offhand in delivery, masked a deeper truth: Xi Jinping has been refining the tools of economic coercion into a precision strike capability - one that can choke critical industries, split US alliances, and undercut Trump's leverage without firing a shot, a report in the Economist said.
The $659 billion annual trade relationship between the two powers is no longer just about soybean orders or tariff rates.
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As per the Economist, Xi's focus is not on what China buys, but on what it sells - and the global dependencies that flow from it.
This is a sharp break from 2019, when Xi grudgingly promised to buy more US goods in a deal many in Beijing derided as clumsy. Back then, retaliation meant banning a foreign product - Australian wine, Lithuanian beef. Now, China aims for the industrial jugular, squeezing supply chains rather than consumer markets.
Why it matters:
As the Economist report says, Beijing's new playbook centers on weaponizing upstream choke points - rare earths, magnets, battery materials and precision tools - to squeeze Western (and especially US) supply chains while protecting its own.
China's supply-chain choke points are not just a bargaining chip - they are a strategic weapon that can be switched on or off without warning, directly targeting US industries, military readiness, and allied economies.
The 'China squeeze' reveals a shift in the balance of trade power: instead of threatening to buy less from America, Beijing is threatening to stop the world from making things it needs.
For the US, that means the defense industry can't count on steady supplies of rare-earth magnets, advanced alloys, or specialty electronics - vulnerabilities China can exploit in any geopolitical flashpoint, from Taiwan to the South China Sea.
For allies, it exposes how interwoven global manufacturing is with Chinese inputs - and how fragile diversification efforts remain. A single export-license slowdown can ripple from iPhone production in India to missile assembly lines in Texas.
For Trump, it undercuts the premise that tariffs alone can bring Beijing to heel.
For global markets, it signals a playbook that blends statecraft with market manipulation - and one that other resource-dominant nations may be tempted to copy.
In short: Xi's economic arsenal isn't about winning one round of tariffs - it's about making sure China holds the valve on the parts of the global economy the US and its allies can least afford to lose.
The big picture
China's goal, per the Economist: build 'asymmetric dependencies' by purging foreign inputs from its own supply chains while 'tightening international production chains' dependence on China.' Xi framed these dependencies as 'a powerful countermeasure and deterrent capability against foreigners who would artificially cut off supply to China'.
Since 2020, Beijing has assembled a sweeping export‑licensing regime covering 700+ products - from advanced machine tools and biotech to critical minerals - with the power to revoke licenses, track end‑users, and extend 'long‑arm jurisdiction' to goods made in third countries using Chinese inputs, the Economist notes in its report.
The strategy surged this spring: China throttled rare‑earth minerals and magnets after US tariff escalations - rattling America's $1.5 trillion auto sector and pushing Europe to seek relief ahead of an EU‑China summit.
What they're saying
US trade representative Jamieson Greer told Bloomberg the talks are 'about halfway there' on restoring magnet flows after China's export controls, adding the aim is that magnets 'can flow as freely as it did before the control.'
Xiang Lanxin (National University of Singapore) told the Economist, 'Beijing was not surprised to find it has leverage, but it must be used discreetly.'
Wu Xinbo of Fudan University told CNN the flow could be dialed up or down: 'If the bilateral relationship is good, then I'll go a bit faster; if not, I'll slow down.'
William Yang of the International Crisis Group cautioned that 'Beijing will be happy to keep the US‑China negotiation going, but it is unlikely to make concessions.'
Zoom in: the defense squeeze
According to a Wall Street Journal report, China's curbs are biting the US military‑industrial base. Beijing has limited critical minerals used in 'bullets to jet fighters,' with one supplier offered samarium 'for 60 times the standard price.'
China has also restricted germanium, gallium and antimony - key to night‑vision, infrared sensors and hardened munitions. Result: delays, cost spikes, and scramble‑for‑stockpiles across drone parts, magnets and specialty alloys.
The Pentagon is racing to onshore and ally‑shore supply, taking a $400 million stake in MP Materials to secure rare‑earth magnets for systems like the F‑35 and cruise missiles, the WSJ report said.
By the numbers
$659 billion: the two‑way annual trade in goods
90%: China's share of global rare earths supply
353 tons: US imports of Chinese rare‑earth magnets in June - up from 46 tons in May, but still below pre‑control levels.
700+: Chinese products now subject to export licenses, many essential to Western defense and clean‑tech value chains.
Between the lines
Trump's tactical pause gives Beijing what it values most: time. As Bloomberg's Karishma Vaswani writes, China is channeling a Mao‑era concept of 'protracted war' - absorbing short‑term pain to shape the endgame. Each round ends with an agreement to meet again, while Beijing avoids concessions on core demands and deepens self‑reliance.
Even with the reprieve, Bloomberg Economics estimates China still faces average US tariffs of 40% - but Beijing is betting endurance will outlast Washington's political and business pressure.
It's certainly true that Trump's policy pivot is a problem for Beijing. Bloomberg Economics calculations show tariffs at the current levels would erase more than 50% of sales to the US. But it's far from the end of China's development story. China's exports to the US equal about 3% of gross domestic product—down from a peak of 7% two decades ago, after a campaign to diversify away from American consumers that's been every bit as deliberate as US efforts to reduce reliance on Chinese supply chains. That means even if half of China's exports to the US get wiped out, the blow to the overall economy is just 1.5%. Not good news, to be sure, but far from a disaster.
An article in Bloomberg
Domestically, China's economy is slowing - 5.2% growth in the April‑June quarter, youth joblessness at 14.5% - yet Xi can frame the contest as national fortitude against external pressure.
Internationally, per MSNBC's Anthony L Fisher,
Chinese nationalists see Trump as 'an entertaining, useful idiot' and even nickname him 'Chuan Jianguo, meaning 'Trump the Nation Builder'... he is making China stronger by undermining America.'
He cites The Economist's reporting on such nationalist sentiment.
How Trump's tariffs are rewriting India's alliances
Some of Trump's policies have inadvertently strengthened Beijing's position.
Blanket 'reciprocal' tariffs alienated allies such as India, a potential counterweight to China.
Emerging markets in South America and Africa have moved closer to Beijing.
China has overtaken the US as South America's top trading partner.
Trump's tariff escalation and public insults have pushed India toward the BRICS bloc (China, Russia, Brazil).
Shared grievances over US tariffs are fostering a possible Global South alignment that could reshape trade, energy, and security.
Henry Wang (Center for China and Globalization, Beijing) says India–China ties are in an 'up cycle.' Wang argues that as Global South leaders, India and China 'have to really speak to each other.'
Reality check
Interestingly, weaponized interdependence cuts both ways. The more China uses its controls, the more it incentivizes diversification. Stanford's Matteo Maggiori told the Economist that sanctioning power is 'non‑linear' - the difference between controlling 95% and 85% of a market is the difference between a chokehold and an opening for rivals to invest.
Europe, Japan and the US are already de‑risking, and Washington is throwing subsidy muscle at magnets, chips, batteries and mineral processing .
Still, it will take years to stand up alternative mines, refineries and magnet plants. Meanwhile, China's licensing rules let officials pinpoint and pinch specific Western defense primes - slowing a missile program here, raising a jet‑engine cost there - while resuming broader flows to keep headline trade calm.
The bottom line
The Economist rightly says that Beijing has mastered the dark arts of the trade war by shifting the battleground upstream. Rather than haggling over soybean buys or headline tariffs, Xi's team is exploiting the places where China's grip is tightest - rare earths, magnets, specialty metals, critical machine tools - to force concessions without making many.
Whether Trump realizes it or not, Beijing is already winning the tempo war. Rare earths, minerals, and machine tools may not grab headlines like aircraft carriers, but in a world wired together by supply chains, they are weapons in their own right.
The more Trump tries to squeeze China with tariffs, the more Beijing refines its ability to squeeze back - with more precision, less noise, and a longer view.
Right now, Xi is betting that Trump will be the first to blink.
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